NerdWallet data shows holiday gift spending down 21 percent

Americans are planning to spend considerably less on holiday gifts this year compared to the previous holiday season. A new report from NerdWallet indicates the average person intends to spend approximately $880 on presents. That figure represents a 21 percent decrease from last year, when consumers expected to spend just over $1,100 on gifts.

Kim Palmer, a personal finance expert at NerdWallet, attributes this decline to persistent inflation. She explains that rising prices across many consumer categories have forced households to tighten their budgets. Palmer noted that families are not just cutting gift costs; they are also reducing travel expenses and staying closer to home for the holidays.

“The really big underlying story is that people are stressed out financially because prices have been rising across so many consumer categories, and so people are really forced to think, OK, how can I cut back while still celebrating the season,” Palmer said. She added that people are addressing this stress by lowering their overall spending.

To manage these tighter budgets, Palmer advises shoppers to create gift lists early and spread purchases across several months. This strategy avoids the pressure of buying everything in December. She suggests tracking specific items and waiting for sales, as prices often dip as the holidays approach.

Palmer also warns against relying on Buy Now, Pay Later services. While these options allow consumers to spread payments out, they create debt that must be repaid. “Of course, it’s a little bit risky because it’s a form of debt and you have to pay it back eventually, so that can be difficult once January hits,” Palmer said. She recommends using cash or debit cards instead of tapping into emergency savings or making impulse buys.